Shell's Floating LNG Project Ships First Cargo

Date : 06/11/2019 @ 2:14AM
Source : Dow Jones News

Shell's Floating LNG Project Ships First Cargo

Shell 'A' (NYSE:RDSA)
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   By Robb M. Stewart 
 

MELBOURNE, Australia--Royal Dutch Shell PLC's massive floating gas factory off Australia's northwest coast, a multibillion dollar engineering achievement years in the making, has shipped its first cargo of liquefied natural gas.

Roughly the size of four soccer fields and displacing six times as much water as the biggest aircraft carrier, Shell's Prelude has sent its first tanker loaded with fuel to customers in Asia.

The shipment is an important milestone for the project, said Maarten Wetselaar, Shell's director for integrated gas and new energies. "Prelude forms an integral part of our global portfolio and plays an important role in meeting the growing demand for more and cleaner energy for our customers," he said.

Secured by mooring chains to the floor of the Indian Ocean almost 300 miles off the remote town of Broome, the vessel has been designed to operate in place for 25 years and withstand even the fiercest storm.

Prelude is producing natural gas from a nearby field, bringing it on board where it is chilled to a liquid for transport. The floating facility is designed to produce 3.6 million metric tons a year of LNG.

The facility began its journey from a South Korean shipyard in mid-2017, pulled by tugboats to Australian waters where pre-installed mooring chains were lifted from the seabed to anchor the vessel.

While Shell hasn't publicly given a schedule or budget for the project, it has been hit with delays and the company two years ago had anticipated cash flows from Prelude would begin in 2018.

Production only got under way in late December, and the company on Christmas day said its focus was on ensuring a controlled environment for the project so it would operate reliably and safely.

Big floating LNG platforms have long been viewed by energy companies as a way of squeezing into a single facility the processing, storing and offloading operations that sprawl onshore so that they can be based over gas fields. That removes the need for pipelines to land, dredging and other costly and often disruptive work. Floating vessels can be moved to remote sources of gas, worked for several years and then moved on to another isolated field.

Yet despite being on the drawing board for decades, there are few such vessels in operations.

Malaysian energy company Petroliam Nasional Bhd's Satu floating LNG operation began production at the end of 2016, about a year later than scheduled, and shipped its first cargo a few months later. Early last year, Bermuda-based Golar LNG began production at a FLNG platform in Cameroon. Other floating LNG vessels are planned, including Eni's Coral FLNG project offshore Mozambique that is slated to start up in 2022 with a 3.4 million ton a year capacity.

Shell made the final investment decision to push ahead with Prelude in May 2011, targeting the Prelude gas field and a resource estimates at about 3 trillion cubic feet equivalent. Major construction work on Prelude began in late 2012, with the cutting of the first of more than 260,000 metric tons of steel for the world's biggest floating LNG vessel, roughly 1,600 feet long and weighing more than 600,000 tons.

Shell has said Prelude will be able to withstand the severest cyclone. Ocean-going LNG carriers will load liquefied gas, chilled to minus 260 Fahrenheit and shrunk in volume by 600 times, from the floating facility for delivery to markets worldwide.

 

Write to Robb M. Stewart at robb.stewart@wsj.com

 

(END) Dow Jones Newswires

June 10, 2019 20:59 ET (00:59 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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